Wednesday, August 1, 2012

Quote of the Week (Facebook edition)

This week's Quote of the Week comes from the world of Facebook, that ever-shrinking titan of social media. Things haven't been going so well for the company ever since they went public, as the increased scrutiny seems to have uncovered a number of pretty serious warts, none more serious than these most recent allegations as reported by PCMag.
A New York-based startup is ditching Facebook after it discovered some questionable activity on the social network's ad platform. 
Limited Run, which develops e-commerce platforms for musicians and labels, claims that 80 percent of the clicks for which Facebook was charging came from bots, not real Facebook users. 
The company said it discovered the problem several months ago in preparation for the launch of the new Limited Run. "We noticed some very strange things. Facebook was charging us for clicks, yet we could only verify about 20 percent of them actually showing up on our site," Limited Run said in a blog post.
I'd recommend reading the whole blog post for the gory details, but the long and short of it is that there are some potentially serious issues with the way that Facebook is reporting and charging for its ad clicks. There may be no ill will intended there—Limited Run, for their part, doesn't think there is—but the issue may be indicative of a serious lack of internal controls at Facebook, and that's a huge problem for a company that relies on advertising revenue to succeed.

But it is a secondary allegation by Limited Run that is the source of this week's Quote. The company claims that Facebook refused to let them change the name on their page (from "Limited Pressing" to "Limited Run") unless the company agreed to dramatically increase their advertising expenditures—not surprisingly, that didn't go over too well with the folks at Limited Run.


"Damn we were so pissed. We still are. This is why we need to delete this page and move away from Facebook. They’re scumbags and we just don’t have the patience for scumbags."
                                  - Limited Run

In the wake of Limited Run's allegations, Facebook scrambled to clarify that it is not company policy to charge to change names, and that they would address the situation. While that's the correct move, this is yet another indication of a general lack of internal controls at the company.

Simply put, Facebook's executive team doesn't seem to be ready for prime time, and they are going to seriously need to get their act together if they are going to remain a public company. This kind of scrutiny is only going to get worse for them, and each "unfortunate" incident like this will continue to have a negative impact on Facebook's stock price.

The spotlight is shining, and so far Facebook has wilted. For a guy like Zuckerberg who hasn't made too many friends along the way, they can't afford too many of these hickups before the whole world simply revolts. The world is watching, and the clock is ticking.


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